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tv   Closing Bell With Maria Bartiromo  CNBC  July 17, 2013 4:00pm-5:01pm EDT

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reports. we'll have the numbers and market response in a few minutes, and more from the delivering alpha conference as we get ready for the speech by carl icahn. stay tuned. hour number two of the "closing bell" getting under way right now. [ bell ringing ] and it's 4:00 p.m. on wall street. welcome back, everybody, to the "closing bell." i'm sitting in for maria, who will be back tomorrow. well, bill griffeth is walking over. he'll rejoin us in a moment. a pretty mixed picture on wall street as investors are bracing for a barrage of earnings. we're just digesting, we're just settling down now. let's see how we're finishing up the day on wall street, with the dow squeaking into the black there. it was hugging the flat line for quite a while in the afternoon trade. currently to the upside by about 17 points. the nasdaq finishing up by 11
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points and the s&p up by 4 1/2 points. let's break down this market and find out what's going on. bill? >> with us right now is amy wu from rbc capital market, george young and our own rick santelli, but joseph is standing by. we'll get analysis of ibm's numbers when they are released momentarily here. amy, what's your version of why we got such a quiet market today, so much news? housing starts were down sharply. the beige book looked pretty good. and chairman bernanke spoke today, and the market took everything in stride. why do you think that is? >> hey, bill. i think a lot of it has to do with this wait-and-see market that we're in. so the options volume in our market has been relatively light coming into this. i think a lot of folks wanted to see what ben bernanke was going to say, and ben bernanke basically said, okay, we're going to wait until we see data, and then we'll see, and then we'll act. i think what's happened in the options market is you've seen
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the decline and no one is putting on any protection trades because so much of it is data-contingent. >> that is a good point. how do you trade in this environment, george? what do you do? >> i like seeing a quiet market. it means investors are rational. it means they're sataking a sanguine approach to how to invest the money. the stocks remain cheap irrespective of the fact the market has increased. i do remain nervous about bonds. i'm very concerned that investing in bonds is like picking up a dime in front of a steamroller. you can get rolled over. we want to focus on stocks. stocks will give you 2% yield. that's about what you get in treasuries. and i think it's important people remain focused that long term is the way to invest. >> okay. let's get to the first earnings report. intel is the first one. jon fortt has the numbers. how do they look? >> reporter: bill, a little bit light on the top and the bottom, close to in line, though. wall street was looking for around 12.9 billion in revenue. they got 12.8.
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looking for around 40 cents, they got 39. the outlook, wall street was hoping for 13.73 billion for this quarter that we're in right now. intel guiding to a midpoint of 13.5. 61% gross margin plus or minus, which is nice. just going down by segments a little bit, the pc client group was down 7.5% year over year in the quarter. data center group was flat, faring a bit better, and intel appears to have come right in at the midpoint gross margin-wise, 58%, which they guided to. >> all right. very good, jon. we'll be checking back with you when we have intel cfo stacy smith speaking to us momentarily, even before jumping in on the call with the analysts. that's a first on cnbc interview, so keep it here for that in a few minutes here. rick, let me get back to the market response here to what happened today. you did see bonds -- prices rise, so yields came back below
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2.5%, and gold tanked today. what did you make of market responses to everything that was going on? >> well, i think when it comes to policy, a lot of the questions that were posed when they were in regard to the effectiveness of the programs, ben really talked them up. he's made a positive difference, that we're one of the envy economies of the world. when it came to the taper, it was no, no, no, we can't taper because the economy's too weak. i think those mixed messages are reflected in a positive way in stocks which did not move up or down in a large way. but i do think the data this morning, as much as it's dismissed on housing, the starts are the lowest level in a year. yes, it was mostly multifamily. but multifamily's been a big linchpin in some of the growth factors previous numbers. yes, we dropped eight basis points in a 10-year at 8:30 eastern. and i will say that the big bond funds love being long in the five year and it's been a pain trade. but the curve's steepening, we
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see, benefits the five year in that regard. >> a real quick question, rick. was it a majority of traders down there saying where they think the 10-year will end up at the end of this year? >> well, it's really been under revision. traders don't hold the same thought process as the markets have been changing. most people here think it will be above 2.5. many think it will be closer to 2.75. and i think that the other thing that's big, most traders do not believe we'll see a significant taper, now that goes outside mainstream in surveys, but that's their belief. >> amy, what about earnings? we're right in the thick of the earnings reporting season. what are your expectations this time around? we've had anecdotal evidence on some fronts that the economy has slowed down in the second quarter. what do you think? >> well, you know, one thing we've noticed from the options perspective is there had been a huge focus on financials coming into this earnings event. not surprising, because typically financials makes up
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50%, 60% of the expiration volume you'll see in july with that much weight of the reporting. in terms of the earnings going forward, i see a lot of focus into retail, into tech, into energy, where the bulk of those earnings are coming. the volatilities are inexpensive now, and one thing i would point out is that when you look at the domestic option prices, so the u.s. sectors versus gold or eem, or fxi, there's a huge divergence. so often prices are still quite high in china, in emerging markets, but they're quite low across the u.s. domestic sectors right now. >> what about you, george? in terms of the current earnings season. what are the best investment ideas in terms of sectors that you can give clients? >> well, i have to admit, we're more securities-specific. it's interesting people are focused on this earnings season. a lot of managements have guided so they want to give annual estimates. they don't want to give quarterly estimate the. they don't want to be pinned down. that's right. the way to manage a company, the way to invest is again look at the long terryl. so focus on short-term is wrong. i think that's not the right approach.
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the best way to approach that is look at what we think will happen long term. a couple of good stocks, sothebys's, with christie's, it will always make money, but it will make money whether you have death, debt, divorce, or any other problems that might lend people to buy or sell art. we look from the bottoms up. >> are you still looking for companies that pay a healthy dividend, george? >> we're always looking for healthy companies, but we're not necessarily dividend-oriented. the good thing about dividends is they give you concrete stability. you know you can get 2% from the s&p 500, for instance. >> right. >> a lot of companies, however, we buy are small and midcap. they grow, they reinvest the dividend rather than paying that out to the shareholders. that's what we look for. >> seeing volatility in the american express. let's go to mary thompson with that. how do they look? >> the earnings, bottom line, better than expected. $1.27 a share. analysts were looking for $1.22. so a five-cent beat there. revenue was light at
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8.25 billion. analysts were looking for 8.3 billion. a positive number on consumer spend, up 7%, ahead of estimates. its return on equity, though, declining to 23.6% from 26%-plus in the prior quarter. here's a comment from the company's chairman. we generated record bottom line results this quarter despite an uneven global economy. mentioning, of course, card members spend up 7%, with broad-based gains throughout the business both here in the u.s. and internationally. the conference call, again, starts at 5:00. i'll have more details on that as they break. back to you. >> thank you. we still have to go ebay and ibm, the big one, coming out here shortly. we'll have those numbers for you as soon as they come out. amy, we're still seeing -- at least the two companies that have just reported -- light on revenue -- okay, we do have the ibm numbers now. where am i going? jon fortt? okay, jon, take it away. >> ibm numbers are out. they're a mixed bag.
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eps beat, but the guidance is going to be a little bit of a concern here. revenue came in at 24.9 billion. versus 25.4 expected. nongaap eps at 3.91, a lot better than the $3.77 expected. software business up 5%, costs and currencies, services down around 1%. the services backlog doing pretty well at $141 billion. that's up 7%. growth markets are flat. but here's what i want to dig into a little bit, excuse me while i turn to read this. on the full-year expectations, ibm saying the company said that a substantial second-half gain, it was expecting in its prior yield earnings per share will not likely be achieved the end of 2013. as a result, the company updated its prior year eps expectations including the impact of a workforce rebalancing charge, et cetera.
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full-year operating non-gaap earnings expectations are at least $16.25, including the second quarter rebalancing. i believe in the past, it had been $16.70. now, it's $16.25. but i need to check that. that seems to me to be a little bit of a difference. i want to dig in more deeply, bill. >> indeed. let's dig in more deeply now, because we have john here, equity analyst covering ibm. we're just watching the after-hours action here. up by 3.5% with the share price there. revenues, as we can see, lighter than expected. you eps better than expected. what's your take? >> yeah, i think what you're seeing here is you're seeing the stock react to the fact that earnings have come down. one of ibm's major plans is to go into 2015 and produce $20 in earnings. anytime annual guidance comes
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down on the earnings front, it calls in to question that. that's a very important number, because all along the funds are looking at about 12.5 times forward which ends up being about did a 250 price target. >> is there a sector you're concerned about, a one piece of the business that ibm's in right now that you're concerned about? >> hardware has been an issue. it's been very choppy. services, of course, was down this quarter by 1%. the backlog was encouraging, but that's been an issue for a number of different quarters. if you look over the last five quarters, you really see a different ibm out there. i think they beat in 35, 37 quartering up until that point. now we're actually seeing numbers come in a little bit and guidance come down. so i think they've got some -- something to prove to the street on the earnings front. i think -- you know, hardware would be an area we'd point to, needs to get better and services, as well. >> so taking all of that into account, what advice would you give in terms of recommendations to an investor in this stock?
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>> i think you really got to wait. i think you have to see catalyst. there's no reason mega-cap don't need. it's been on a treadmill for a number of years because they needed to produce the earnings in 2015. i think you need to see services rebound here. you need to see them get back on the earnings track and start to deliver upside for a couple of consecutive quarters. >> be o. that stock up 3.9% right now, post these earnings. joe, thank you for joining us. >> yes. really good after-hours action for ibm. in the meantime, more than 100 institutional investors with combined assets of nearly $2 trillion have been rubbing elbows at this year's delivering alpha conference. there've also been big headlines today. kate kelly is in the thick of it. give us the highlights, because there are so many. you need to pick out which ones are important for us. >> that's absolutely right, mandy. it's been an interesting day. the equity bulls are back this
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year, but they sound a bit tapered, if you will. they still like stocks although research continues to matter. that's not a surprise. returns may be more muted this year according to cooperman. on the fixed income side, many people say they were just as surprised as the rest of the market at the back up in rates and how fast it moved and that further hikes may be in store and may continue to surprise the broader market. still, housing has gains in store, according to john paulson. the reformed housing bear, who told us in the first-ever television interview he's as convinced as ever that he'll make money on a residential housing long as convinced -- i should say -- as he was about his subprime short. and, of course, there have been numerous stock in sector picks throughout the day. jim chanos made waves, arguing the market has underestimated the downturn in mining. richard perry is shorting japanese credit, calling it an asset class that's wildly overvalued. >> the japanese buyer of corporate bonds is very similar
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to the buyer of either subprime bonds in the u.s. in 2006, 2007, 2008 or the sovereign european buyer in 2008, 2009, 2010. these are not people who are doing credit work. they are relying on ratings agencies that say that these are investment grade, single-a credit, and so they just go every day and they buy the bonds. >> if perry's right, of course, there's a ton of money to be had when the turn comes. on the long side, nelson peltz has amassed a big stake in dupont. and leon cooperman, 10 for 10 with his stock calls last year at our conference, sees big potential in a number of names, most especially sandridge energy. >> well, basically, i'd say that sandridge has the potential for doubling, and if the price of oil and gas move lower, they can go bankrupt. so, you know, risk -- risk and reward.
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>> that, of course, was cooperman's answer to david faber what's the highest risk and highest reward of all of the 10 picks. all in all, a lot of market-moving news. i'm keen to see what carl icahn has to say about 45 minutes from now. of course, we're one day away from the all-important dell shareholder meeting where he's urging folks not that take the management buyout and hoping to provide an alternative that will allow investors future upside in the company. >> yeah. we're all listening for carl icahn. thank you so much, kate kelly. >> by the way, the shares of dupont closed at a 13-year high today as a result of the revelation by our andrew sorkin. shares of pnc down slightly even though that company reported better than expected earnings this morning. coming up after the break, we'll talk exclusively to the company's new ceo. and then, you want to know where the ohio state is investing its $3 billion fund? after the break, we'll go live to cnbc's deliver alpha conference for an exclusive interview with ohio state's chief investment officer.
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welcome back. we've been waiting for ebay's results. they are out. josh lipton, how do they look
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in. >> ebay just reporting. let me get you those numbers. eps 63 cents. that is in line with what the street wanted to see. on the top line, 3.88 billion. analysts were looking for 3.89 billion. in terms of guidance, looking ahead, for q3 and full year, both below estimates. you can see the reaction. that stock down more than 4% right now in the after hours. bill, back to you. >> josh, thanks. the ceo will break down the results tomorrow morning exclusively on "squawk on the street." mandy? >> indeed. it seems very clear theme, doesn't it, bill? just a quick comment there on some of the earnings we're getting out. beating on the eps or in line with the eps. but missing with regards to, what, with revenue. we'll talk about that more tomorrow. >> every single time, yes. we've had a number of banks reporting today. pnc more than doubled its profit. but investors were more concerned with a narrowing key profit measure, which is the net interest margin. >> joining us in a cnbc
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exclusive is pnc financial services ceo, just took the job in april, william demchak joins us. good to see you. thank you for joining us today. >> thanks for having me, guys. >> how about the shrinking net interest margin? that's what investors seem to be harping on today. what pressures are you seeing there? >> well, part of the drop this quarter was due to our own actions. we did some balance sheet management actions early in the quarter where we sold securities when rates were very low and didn't reinvest till later in the quarter when they were higher. so the near-term impact of that was lower margin this quarter. as we move forward, we, like everyone else, face margin pressure because of credit spread and rates. >> what can you do to mitigate that, though, sir? >> you know, healthy loan growth with good credit -- good credit quality loans does a lot to mitigate it. we've been doing that. we've been growing loans at a pace faster than most of the tri. we had 3% loan growth across the space this quarter and that will
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help somewhat. >> we look so much more at mortgage lending, rates rising. what about on the consumer side, consumer lending and business lending? how is that going for you right now? >> you know, consumer lending in our retail bank has been largely flat through time as we have a mixed shift. we've had education loans rolling off just recently, have seen a growth in home equity loans. we've had continued, like our peers, continued growth in indirect auto and auto loans. but by and large, it's a mixed bag, with not a lot of overall growth. >> and what happens if rates keep rising? >> well, we're set up for rising rates. i hope they do. rising rates overall would help the banking industry, would certainly help us. i think it'll slow down -- you know, you've heard a lot of talk about the slowdown in the mortgage refinance market. that will definitely help. that's a small piece of our business. so overall, rising rate environment will definitely help our company. >> yesterday on our show the s.e.c. chairman mary jo white said the following about, what is ahead for the dodd-frank
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regulations. let's have a listen, and then, sir, i'd like to get your reaction. >> okay. >> a number of the dodd-frank provisions in particular, some of the capital requirements now, are designed to deal with what we all went through, which is the financial crisis. and protect against that happening again. that's obviously very important for our economy, very important for our markets. but as we rulemake at the s.e.c., you know, we are considering all of those issues in terms of how those rules impact not just in terms of the protections, but also in terms of making sure that we're considering what it does to capital formation and the economy. >> so, william, what do you think the rule makers are getting right? what do you think they're getting wrong? >> look, i think they're getting a lot right. and i think the industry's getting a lot right. we've doubled, you know, as an industry, doubled the amount of capital that we hold today versus when the crisis occurred. and i think higher capital levels are appropriate. i think changes in leverages are appropriate. i worry a little bit there's too many doctors looking at the patient, and that there's been
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too many drugs, you know -- >> administered? >> -- administered, thank you. >> you're welcome. >> and i'd kind of like to wait and see the outcome of that before we throw more medicine on the party. >> i agree on that one. bill demchak, now the ceo at pnc, thank you. >> thank you. >> yes, too many cooks spoil the broth. thank you so much. let's get to jon fortt once again with more details on ibm's results. what are we seeing? >> mandy, i said i'd keep digging in. i want to clarify something on the full-year eps outlook on ibm. it's actually up, excluding the workforce rebalancing charge, it's up 20 cents to $16.90. also, operating and gross margin are expanding up to 48.7%. ibm touting that systems z, the hardware -- very important hardware unit sales are up. software is up. and this is a key number to note. services signings were 16.4 billion, up 20%.
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a lot of people had been expecting 13.6 billion. so that's quite a bit better. they say they have 15 new contracts there of more than $100 million each. so this appears to be ibm asserting that they still have operational discipline, able to make this eps appear as they have promised, and, also, growing in some key areas that appeared weak with that miss last quarter, mandy. >> all right. thank you so much, jon fortt. we've heard from intel. their shares on the move following the chip giant's results out just a few minutes ago. the company's cfo, stacy smith, will speak with us in a first-on cnbc interview coming up. he hasn't even spoken with analysts yet. keep it right here. we'll hear what he has to say. yeah, the after-hours prize action, we can see intel is down 1.5%. and later on in the show, bill, "rolling stone" magazine is getting really slammed big time for its upcoming cover. the mayor of boston is out just the last hour with a scathing
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with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. faso you want to save on autoof insurance?. drive a hybrid. get good grades. lose the bling. go paperless. combine policies. make automatic payments. and of course, talk to farmers. hi ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪ let's go straight over to josh lipton for a quick "market flash" on the stocks moving today. thanks to the news coming out of delivering alpha. >> big names making big calls at our delivering alpha conference today. andrew interviewing nelson
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peltz. sorkin reporting that peltz amassed a stake in dupont, and that stock jumping on that headline. also, peltz's stakes in pepsi and mondelez, says pepsi should acquire mondelez and push for beverage business separation. by the way, peltz also saying he hates the name mondelez. it sounds like a disease, he says. jim chanos also making news today. he is shorting caterpillar, a play, he says, on the worsening outlook for mining cap ex, says cat now faces super commodity headwinds that its supporters do not appreciate. leon cooperman gave us ten pick, including qualcomm. he says there is too much pessimism in this name. he talked about the $31 billion of cash on the balance sheet, no debt. he remains a fan. mark kingdon named a pharmaceutical company, talking about the cholesterol-fighting drug, saying it could be over 15,000. he likes japanese stocks with a focus on autos.
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and carl icahn will be setting down with scott, so more details to come. and intel's numbers not moving much. in a first cnbc interview, we have the cfo, stacy smith, back with us. good to see you again. >> thank you. >> how do you characterize the second quarter this year? >> you know, the second quarter came in in line with what we thought. we saw a little bit of unit growth, a little bit of revenue growth, margins expanded, so it was pretty much where we thought. i think what really is driving our business is the product cycle. we have a great slate of products coming out across tablets and 2-in-1s and ultrabooks and that's helping our results right now. >> but you're cutting your full-year revenue forecast, i understand. so what's gone wrong there? >> yeah, we saw as many of the third parties have, we lowered our expectations for the
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traditional pc market. and so, we brought our guidance down as a result of that. but we're also within the second quarter, you started to see some real traction in some of the large-growth markets where we're gaining shares, things like tablets. and we announced this quarter the samsung galaxy tablet win, which is a great product. >> and did the industry underestimate the swiftness of the consumer move to mobility? i mean, we talk about the decline of the pc and the rise of all of the mobile devices out there. did the industry -- are you behind the curve on that? >> well, i think what we're seeing is a couple of troends that are really driving the industry right now. first of all, technology is becoming more and more personal. it's becoming more and more mobile. and the market really now is dominated by consumers as opposed to the enterprise. the result of that is that you're seeing the rapid transitions in technology, and, yes, i'd say we were a little slow to recognize the trend
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towards mobility. we're moving past now and we have great products in the market. >> we often talk about it, and i know it's hyperbole, but we often say, will we see the death of the pc, or are we seeing the death of the pc? but surely it's not too many years away, sir. >> well, i think what you're seeing is the pc market reinventing itself. if you just look at what's happened in the last 18 months, you know, notebooks have gone from relatively large, relatively limited battery life machines to these very thin and light, sleek devices. and the transition that we think we go through in the back half of this year is that the pc market really evolves towards these 2-in-1 devices. it's the best of the pc and the best of the tablet, an that's enabled by a combination of touch screens, our processors which are very power efficient and powerful, and windows 8.1 coming to the marketplace, i think transforms the marketplace in the back half for us. >> you have a new ceo,
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obviously, coming on board. maybe i should be asking him. how do you think intel will change -- do you go in different directions under his leadership? or what do you sense he has in mind here? >> yeah, i think -- i think what we're seeing under brian's leadership is this focus on the ultramobility market, what we've been talking about. if you think about the assets of the company, the process technology leadership, which allows us to do higher performance, but more importantly, lower power and lower cost devices, we can take that manufacturing lead and we can really build a very strong leadership position in things like tablets and things like phones and in markets that are still forming around us, thing like wearables. that's where brian's focus is, and the company is redoubling our efforts in that space. >> what still keeps you up at night? >> you know, it comes down to, for us, the macroeconomic
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environment. we're such a large player across so many markets. you think about the data center business, the traditional pc market, where we're going with a lot of these ultramobile devices -- tablets and phones and 2-in-1s -- to a large extent intel is going to be impacted by what's happening in the macroeconomic environment. i'm pleased this year things seem to be pretty stable. the u.s. is maybe a little stronger. china is maybe a little weaker. on a worldwide basis, we look to be in line with what we thought at the beginning of the year. that is the first thing i look for. >> i was going to ask you the geographic question. and your feelings from the cyclical standpoint of where we are in our economy. we had anecdotal evidence in many sectors that maybe the economy in the u.s. slowed down in the second quarter. did he see that? and what's your expectation for the second half of the year? >> yeah, i think the macroeconomic environment is playing out pretty much as we thought at the beginning part of the year. the u.s. may be a little bit stronger. china somewhat weaker.
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and those are our two largest markets for technology. i think the segment of the business that's most impacted by the macroeconomic results is our data center business. we have a $10 billion-plus business selling intel data business centers, servers, a fast-growing business. and that's the one most impacted by the overall macroeconomic environment. >> and the changes, the share prices, down 6%. so what would you say to investors, stacy, what would you say to investors who are saying, we'd love to eek out more shareholder value here? >> you know, the management team at intel is absolutely committed to drive our results, drive our cash flow and drive shareholder value. and we're trying to react quickly to changes in the marketplace. but i think the real story for the company is the product cycle. with haswell coming to market, we have this incredible leadership position with ultrabooks, and we're starting
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to enable the price points and touch-enabled pcs. and we've got some great products in the tablet market starting to shift. it's that manufacturing leadership that leads to this product cycle. i think that really is the long-term story for us, and that's what we're driving. >> you think the wearable pc will go places, like google glass and some of the other things that are in development right now? >> you know, i think if you step back and you look at those trends that i talked about, technology becomes more personal, it becomes more mobile, and it's driven by consumers. i think what that means is you're going to see this explosion of technology out there. and it's going to range from the internet of things to things that you wear on you, to devices that you carry with you, like ultrabook or 2-in-1 or a tablet. so the market for devices that compute is almost infinite. so for us, the key is to have that sensing mechanism so that you see where it's going, and we get there first. >> right. very good. stacy smith, the cfo at intel. we always appreciate your time.
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thank you for joining us. we'll let you get to the conference call. >> thanks for having me. >> thank you. thank you, stacy. go buckeyes! ohio state's rocking football team is a big draw for fans, as well as donations. bill? >> even mandy likes their football team. when we come back, we'll go back to the delivering alpha conference to find out how osu's chief investment officer plans to invest his school's $3 billion endowment fund. stay with us. ♪
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student loan debt officially topping $1 trillion with a "t" there, folks, according to the consumer protection financial bureau. meanwhile, a big white house meeting with key senators to fix the interest rate loan mess. did it yield any results? let's get to john howard to try to find out. what would you give it, a scale of 10, in terms of a progress report, john? >> reporter: oh, i think they're about a 7, mandy. they're close to a deal, but they're not there yet. you know, we had the nuclear option breakthrough yesterday which moved some nominations along, but it hasn't resolved legislation that's stuck, and specifically student loans remain in limbo. just to recap, on july 1st, the student loan rate doubled from 3.4% to 6.8%. congress has committed itself to rolling that back, meaning the
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increase is just temporary. but they haven't resolved how to do that. one of the sticking points is going to be, does the rate that's set on these loans bring in enough money to reduce the deficit or not? the democrats are resisting -- senate democrats are resisting a compromise that the president and house republicans and senate republicans have agreed to. this is one where democrats have the losing hand. the white house is losing patience, and the question's going to be when there's another meeting tonight, a bipartisan senators, when exactly do senate democrats fold their tent and make a deal? we expect this to be done before the august recess, and we do expect it to be a market rate pegged to treasuries, plus a couple of points. the question is, what is the cap on those rates under the current compromise? it's 8.25%. some senate democrats want it lower, and, bill, as mandy indicated in the toss, the $1 trillion mark in outstanding federal student loans shows you how big the stakes are in this discussion. >> they are huge for a lot of
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people out there. john, thank you very much. let's talk more about that among other things. joining us live from the cnbc delivering alpha conference in new york city, jonathan hook, who's chief investment officer at the ohio state university. jonathan, good to see you. thank you for joining us. >> thank you, bill. it's a pleasure to be here. >> let's start on the student loan issue. it's become so huge and so important to so many people out there. what impact do you think it has when rates rise that much and the government can't seem to bring it back down again? >> well, it's certainly a drag on the student's ability to be able to afford to go to college. we're very hopeful that there's a bipartisan solution so that we can reduce costs and increase affordability to all of the students. >> what would you like to see? is there a rate you'd like to see? i mean, what form would you like to see this bipartisan solution have? >> i really don't have a rate that we're looking for. i think probably some number between the original rate and the rate that it's been raised to. hopefully, on the lower end of that.
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but i think we have to wait for congress to act and come up with a solution that we can all live with. >> i certainly hope your confidence is well placed and they're able to find a bipartisan solution. in the meantime, let's get to the investing side of the equation, sir, because you do run the long-term investment pool at ohio state. what in particular is on your radar screen right now? >> i think right now one of the things we're looking at are a lot more long/short managers. we think with volatility increasing in the market, that those two are able to be very good stock pickers, should be able to do well in this market, and those that we have in our portfolio this year have done quite well. equities have been strong for us all this year, as has credit. and we're building the private portfolio that has also worked quite well. so i think really at the baseline you have to say stay diversified, but i think we would be tending toward a bit
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more equity exposure than fixed income. >> domestic equities? domestic equities or international, or a mix? >> i think right now we're still leaning more toward domestic, but given the sell-off in international and emerging markets, i think there's some very good buys. the question is, when to get back in. >> do you think that foundations and endowments like yours outsmart themselves too much when they try to be too much of a stock picker rather than just investing in the market? i mean, so many individual investors these days just invest in the market, whether it's through an etf or index fund of some kind like that. why not do the same as a foundation, or, you know, other nonprofit organizations out there? it would be a lot cheaper and more efficient, don't you think? >> well, i think the last three years is where index investing has paid off well, keeping costs low and the markets have run up. i think if you see the markets calm down a bit and equities not be quite so strong, but increase
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volatility, i think some of the moves that many of the endowments have taken will work out quite well. >> you know, we here at cnbc obviously hang on every word that ben bernanke utters, and we assume that everyone else in the mark does, as wellment but do you? how much does it play into your strategy what, for example, ben bernanke says in his testimony today? >> i think what he said has been consistent with what he has been saying. and certainly what he said about a month ago. i believe the market did overreact a bit, but we felt comfortable that the market would overreact whenever he did make his first comment about tapering. we see a difference between tapering and tightening. and again, from the endowment perspective, we have the ability and the luxury, in fact, to think on a very long-term basis. so what he does today or what the markets do today is not necessarily as critical for us as those who are more trading
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oriented. >> indeed. jonathan hook, thank you so much for joining us. >> thanks for joining us. >> you bet. thanks for having me. huh-oh. housing starts dropping to their lowest level in nearly a year in june. but how worried should we really be one of the pillars of the economic recovery may be cracking? that's coming up next. >> a very volatile number, that one. and this magazine cover is creating quite a stir. if you are looking at it, you know it's for good reason. many say "rolling stone" is glorifying a murderering terrorist. we'll have the story when we come back. f-f-f-f-f-f-f. lac-lac-lac. he's an actor who's known for his voice. but his accident took that away. thankfully, he's got aflac. they're gonna give him cash to help pay his bills so he can just focus on getting better. we're taking it one day at a time. one day at a time. [ male announcer ] see how the duck's lessons are going at
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risk includes possible loss of principal. how worried should we be that housing starts unexpectedly fell near a year low last month? let's get straight to the housing guru for a realty check. diana? >> the housing recovery continues to keep us guessing. starts were expected to rise, but that, of course, was not the case. it can't be rising rates yet, but it does not bode well for the future. take a look. housing starts down nearly 10% month-to-month, driven mostly by a 26% monthly drop in multifamilies. the starts were essentially flat, down just under 1% for the month. but up 11.5% from a year ago. permits were up just under 1% for single family, down nearly 23% for multifamily month-to-month. suggesting lower starts in the coming months, despite high demand. now, this again was not the expectation, especially after homebuilder confidence rose to a
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seven-year high in july. the fed chairman did not seem particularly concerned. >> this morning we had a housing report that was a little bit weaker, but again, i think that given the amount of noise in every piece of data, i don't think it's appropriate to take too strong a signal from that. >> mortgage rates moved down on the starts number. the 30-year fixed averaged 4.68% on the mba survey. for the past week, is is down from the spike a few weeks ago but higher than the lows of early may. bernanke said he would be watching the effect of rising mortgage rates on housing closely, but he repeatedly said, quote, we intend to maintain highly accommodative monetary policy for the foreseeable future. so are you still optimistic? either way, you want to check out the realty check on cnbc. >> thank you for putting it into perspective. thank you very much, diana. up next, the latest issue of "rolling stone" features the alleged boston marathon bomber on its cover and now one of the
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largest retailers is boycotting the magazine. we'll bring you more details on the backlash next. also, our special delivering alpha edition of the "closing bell" will continue. we're minutes away from hearing from carl icahn, among other wall street luminaries. more hearing from billionaire investor carl icahn among other wall street luminaries, more news makers coming up. don't touch that remote. before they funded scholarships to the schools that gave them scholarships... before they planned for their parents' future needs and their son's future... they chose a partner to help manage their wealth, one whose insights, solutions and approach have been relied on for over 200 years. that's the value of trusted connections. that's u.s. trust.
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>> a lot of people are asking the questions what were they thinking today. rolling stone magazine taking a lot of heat over the cover of its upcoming issue with a major drugstore chain now saying it will not sell this magazine because of that cover. >> bill, instead of a rock star or celebrity. rolling stone has chosen to feature dzhokhar tsarnaev on its cover. both walgreens and cvs has chosen not to sell the issues. cvs saying we believe this is the right decision out of respect for their loved ones. the mayor saying the cover, quote, rewards a terrorist with celebrity treatment. rolling stone responded to the controversy saying in part our
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hearts go out to the victims of the boston marathon bombing and our thoughts are always with them and their families. the cover story we are publishing this week falls within the journalism and long-standing commitment to serious and thoughtful coverage of our cultural issues of the day. in 1970 charles manson was on the cover. rolling stone isn't the only cover to have a touchy subject. time magazine but the columbine shooters on its person and joseph stalin person of the year. a lot is touchy about this subject. >> they're not so much upset that he's on the cover but they seem to glam orrize him. it's one thing to make it a cover story, it's another thing to row manhu size him.
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icahn getting ready for his appearance at the cnbc delivering alpha conference. is he sporting a beard there? he's talking with scott wapner, getting ready to discuss his public conflict with dell over the future of that company. he has made it clear that he would like to see dell come up with a higher price for the byout of the company. he has had an alternative to the offer that they'll put on the table that supposedly is going to go up for a vote tomorrow. it may not because of carl icahn. we'll hear from him coming up in a few minutes. >> i like the beard very much. with all eyes on the market and earnings for tomorrow. with 30 seconds on the clock our guests are here to tell you what to watch for. darren, you're number one, up first. >> hey mandy, we're looking at rotation from the different sectors, rotation into financials and out of material stocks and out of utilities.
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the comments from ben bernanke today as far as pushing out tapering we think is bullish for the market. we think the stock market is going to continue to grand higher during earnings season and we're looking for the 1720 near term. >> wow, you've got 12 seconds left. you would have gotten a pile of stuff in there. david, what about you? can you do it in 20 seconds like darren did? >> i don't know if i can do it in 20 but i'll take his 12. in general tomorrow we have a lot of tech companies reporting. it's going to be important for the tech tape in general and set the tone. we saw tech benefit from secular trends, proliferation of smart phones, tablets, a move to the cloud. it's going to be very interesting to see how numbers are tomorrow, whether or not we can start to see some top line growth. second half is very back end loaded. i want to see how the numbers look, how the guidance looks, i want to see money pour back into
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this group. >> down right to the wire. steven, you've only got ten seconds. no, you've got 30. go for it. >> unless he signs onto twitter and changes his facebook status i'm pretty sure we're not going to hear from ben bernanke tomorrow. intel numbers weren't good. we're going to see profit taking, anyone tied to computer or hardware, specifically, microsoft. >> thank you very much. bill, i believe that does it for us on the "closing bell." >> that's it. "fast money" starts right now from the alpha conference. stay tuned. >> welcome to a very special edition of "fast money" live from the pierre hotel in new york city at the biggest investor event of the year, delivering alpha. our traders are guy adami, pete najarian and karen finerman. wel


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